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best projects are still a poor strategic fit, one of the major management actions should be to encourage the R & D staff to initiate work on new projects that are likely to increase the value of the portfolio. Finally, does the portfolio ensure a steady rollout of products, or are there pipeline gaps? If there are gaps, even a project with relatively low attractiveness may fill a critical, and strategic, place in the portfolio and should be elevated to a place among the high-priority projects. |
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Third, after addressing the concerns with high-priority projects, the projects at the bottom of the priority list should be carefully examined. Some may be highly attractive but simply do not fit the strategic plan. Intramural development should be redirected to ensure that these projects are groomed as attractive licensing candidates. Are there too many low-priority projects? If so, these should be culled selectively so that they are in balance with the high-priority projects. Projects that do not fit strategically should be promptly terminated, and the resources reallocated to higher priority projects. |
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Finally, the middle segment of the priority list should be examined. In view of the adjustments to resource the high-priority projects and reallocate resources from terminated projects, are there sufficient resources remaining to support the rest of the portfolio? If not, perhaps the company has defined too many strategic targets and this should be examined. Perhaps the company is just too successful in identifying promising product candidates. In this case, some product candidates can be selected for licensing but this should be done so that the remaining portfolio is optimized for the company's strategy and remains balanced in terms of pipeline, risk, and reward value. Projects in the middle deserve to be adequately resourced if the company is to remain competitive over time. If there are resource shortages, careful discussions need to take place in order to determine appropriate allocation of resources and whether prolonged development times due to resource shortages affect the competitive position of the products. |
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1. F. M. Jacques, L. Linden and N. Selby. Turning the pipeline into a hit parade. Pharmaceutical Executive 12: 62, 1992. |
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2. PMA New Drug Approvals. Pharmaceutical Manufacturers Association, Washington, DC, 1992, p. 1. |
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3. J. A. DeMasi, R. W. Hansen, H. G. Grabowski, and L. Lasagna. Cost of innovation in the pharmaceutical industry. J. Health Economics 10: 107, 1991. |
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4. P. Joglekar and M. L. Paterson. A closer look at the returns and risks of pharmaceutical R&D. J. Health Economics 5: 153, 1986. |
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5. F. M. Scherer. Pharmaceutical R&D: Costs, Risks and Rewards. Office of Technology Assessment, OTA-H-522, US Government Printing Office, Washington, DC, 1993. |
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